26 March 2013 – The ultra sustainable Nishi offices and apartment complex in Canberra is perched on the Acton Peninsula. It has a direct view across Lake Burley Griffin, straight to Parliament House.
For the Molongolo Group, developer of this project, one of Australia’s most ambitious, news that the Department of Climate Change and Energy Efficiency was to merge with another department can’t have been good.
According to parliamentary records, the department signed for six floors or 12,250 square metres of space in the 12,700 sq m office component of Nishi in a pre-lease agreement struck three years ago.
Rent, according to Senate Standing Committee on Environment and Communications Legislation Committee, was $6,415,625 or $523,73 a sq m in the first year, excluding GST.
Last year staff at DCCEE was slashed from a high of 1000 to current levels of 670.
A spokesman for Climate Change Minister Greg Combet said 250 staff had been transferred to the Clean Energy Regulator to administer the carbon price and there had been some redundancies.
A month ago the department moved into Nishi, with its lower staff numbers.
Then on Monday Prime Minister Julia Gillard announced the DCCEE would merge with Department of Industry, Innovation, Science, Research and Tertiary Education.
It was part of sweeping changes to her government’s profile on the environment and climate change. Mr Combet said DCCEE had been absorbed by a business portfolio because “climate change is an environmental problem that requires an economic solution”.
Ms Gillard on the same day appointed Gary Gray, a climate denier and former Woodside executive, the Greens say, to head the energy and resources portfolio. There was applause from the mining lobby and dismay from green groups.
The rumour mill didn’t take long to get going.
Media speculation said DCCEE would need to sublet some of its space to meet rental obligations.
Mr Combet’s media spokesman said that was not the case. There would be no more staff losses and the department had signed off on the lease in December for exactly the space it would need, he said.
“As a result of today’s changes there are no plans to reduce the level of resources,” the spokesman said on Monday.
“The lease was not signed until December [after staff departures]” and prior to this only a heads of agreement was signed, the spokesman said.
Molongolo Group said in a written response to enquiries that there was no change in the amount of space contracted in the pre-lease stage and the amount included in the final contract.
“The amount of floor space is in line with the initial Agreement for Lease entered into three years ago,” the company said in a written response to enquiries, the group said in a statement.
But the timing of the DCCEE announcement was not good.
This month, builder for the mixed use precinct Ply Pty Ltd, had placed itself in voluntary administration, with months to go before completion of the apartments, but the offices thankfully for Molongolo group complete.
The developer said it was confident a resolution on the construction issue is imminent.
There’s no disputing, the Nishi project is homage to sustainable passion and commitment.
Designed by Melbourne’s Fender Katsalidis the office building has some outstanding features, including operable windows, night time cooling and a major solar installation on the roof.
Next door the near-completed 220 Nishi apartments also aim for high environmental outcomes and are influenced by Japanese principles of efficient and imaginative use of space.
Throughout the precinct is embedded an abundance of artwork and creative use and re-use of materials.
It’s the brainchild of Molongolo director Nectar Efkarpidis, part developer, part designer, part artist, who had taken on his family’s long-term development commitment on the peninsula and spent years crafting his vision for it.
[The Fifth Estate toured the site in 2011 during a conference for Australian Direct Property Industry Association, now the Property Funds Association.]
For Canberra it’s a sensational development. For Australia, ditto.
But for such a prime sustainable development project, the loss of DCCEE as a lead tenant (the name will go, if not the staff) will be a blow. Though this will be more psychological than financial, since tenants need to honour their lease obligations, sub-letting if necessary.
DCCEE after all was a shining beacon of climate action, and with its commitment to a six star Green Star fitout had shown it was prepared to walk the talk.
From a commercial point of view there are only two floors remaining. Other tenants include Clayton Utz and the Australian Competition and Consumer Commission.
But the residential component of the project, with the builder in administration, could be complex to resolve.
A spokesman for the Molongolo group said 200 of the 220 apartments had been presold.
Mr Efkarpidis told The Fifth Estate in a written response to inquiries, that he was confident a resolution would be found soon.
“Prior to recent events the residential building was only a couple of months from completion and although this issue has caused a bit of a delay we are confident that we are close to resolving it and getting on with finishing the apartments.”
The Nishi offices
In a document dated 17 October 2011, the Senate Standing Committee on Environment and Communications Legislation Committee, Supplementary Budget Estimates 2011-12, 17 October 2011, said in answers to questions on notice, that the amount of space leased at Nishi would be 12,250 sq m.
This equates to 18.85 sq m per person with staff of 650 and 12.25 sq m per person on a 1000 staff basis.
Annual rent in the first year would be $6,415,625 [$523.73 a sq m] excluding GST.
Cost of the fitout in the six star Green Star building, which is also to six star Green Star standard, was $20.5 million, the document said.
The Senate Standing Committee details key measures that will reduce the use of energy by building occupants, namely:
- operable windows for staff use to moderate temperature
- mechanical louvres for night-time cooling
- exposed structural concrete, using the thermal mass of the building to reduce temperature fluctuations
- underfloor air distribution, to increase airflow and efficiency 400-kilowatt solar electricity panel on the roof, the largest in Australia, which will reduce consumption of grid-electricity by 30 per cent.
“The Committee is extremely pleased that this tenancy to be held by the Australian Government will have such forward thinking and sustainable features. Some of these are extremely simple, and others rely on developing technology, but together they demonstrate the need for both creative thinking and innovation in order to improve the sustainability of the built environment.
“The Committee commends DCCEE for securing accommodation with such high environmental standards, and encourages other agencies to build on this example in their own activities.”
Architects for the fitout say it’s not extravagant work.
Angelo Di Marco, managing director of Woodhead which designed the space, said the cost was no more than a non-Green Star rated equivalent office fitout.
Tough time for builders
Mr Di Marco said he had confidence that the issue with the administration of the builder would be resolved but said it was “tough times for builders”.
“Some of the big majors [in development] are doing really well and they have a good volume of work ahead, but that’s only a small percentage of the market.”
Many did not have a lot of forward work on their books, he said, “not compared to the past”.
“We’re calling this the new normal.”